UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q




x
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934


for
the quarterly period ended March 31, 2010





o
            TRANSITION
      REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934




for
the transition period from __________ to __________




Commission
file number:  333-150768





UNIVERSAL
SOLAR TECHNOLOGY, INC.


(Exact
name of registrant as specified in its charter)





Nevada
                
                26-0768064(State
      or other jurisdiction of incorporation or
                  organization)
                
                (I.R.S.
      Employer Identification No.)No.
      1 Pingbei Road 2,
                  Nanping
      Science & Technology Industrial Park,
                  Zhuhai
      City, Guangdong Province,
                  The
      People’s Republic of China
                
                519060(Address
      of principal executive offices)
                
                (Zip
      Code)





86-756-8682610


(Registrant’s
telephone number, including area code)





(Former
name, former address and former fiscal year, if changed since last
report)





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  Yes xNo o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).  Yes oNo x




Indicate
by check mark whether the registrant is a large accelerate filer, an accelerate
filer, a non-accelerated filer, or a smaller reporting company.  See
the definition of “large accelerated filer,” accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):




Large accelerated filer
              
              o
              Accelerated filer
              
              oNon-accelerated filer
              
              o
              Smaller reporting
              
              xcompany





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes oNo x




Indicate
the number of shares outstanding of each of the issuer's classes of common stock
$0.0001 par value per share, as of March 31, 2010 was 22,599,974
shares.





TABLE
OF CONTENTS





PART
      I - FINANCIAL INFORMATION
                
                1Item
      1. Financial Statements
                
                1Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                
                9Item
      3.Quantitative and Qualitative Disclosures About Market
    Risk
                
                12Item
      4T. Controls and Procedures
                
                12PART
      II - OTHER INFORMATION
                
                13Item
      1. Legal Proceedings
                
                13Item
      1A. Risk Factors
                
                13Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                
                13Item
      3. Defaults Upon Senior Securities
                
                13Item
      4. Other Information
                
                13Item
      5. Exhibits
                
                13SIGNATURES
                
                14




Except
as otherwise required by the context, all references in this report to "we",
"us”, "our", “Universal Solar Technology” or "Company" refer to the consolidated
operations of Universal Solar Technology, Inc., and its wholly owned
subsidiaries.





PART
I. FINANCIAL INFORMATION





Item
1. Financial Statements.





UNIVERSAL
SOLAR TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)





March 31, 2010
                
                
                December 31, 2009(Unaudited)
                
                
                (Audited)ASSETSCURRENT
      ASSETS:Cash
                
                $
                1,068,206
                
                
                $
                1,115,047Prepaid
      expenses and other current assets
                
                
                573,740
                
                
                
                319,123Inventories
                
                
                68,169
                
                
                
                42,956TOTAL
      CURRENT ASSETS
                
                
                1,710,115
                
                
                
                1,477,126Deposits
      for future deliveries of property and equipment
                
                
                533,423
                
                
                
                312,362Land
      use right, net of accumulated amortization of $13,537 and $11,452,
      respectively
                
                
                409,306
                
                
                
                411,391Property
      and equipment, net of accumulated depreciation of $6,771 and $3,446,
      respectively
                
                
                3,881,186
                
                
                
                3,294,946TOTAL
      ASSETS
                
                $
                6,534,030
                
                
                $
                5,495,825LIABILITIES
      AND STOCKHOLDERS' DEFICIENCYCURRENT
      LIABILITIES:Accounts
      payable and accrued expenses
                
                $
                254,128
                
                
                $
                154,813Due to related parties-current portion
                
                
                3,189
                
                
                
                5,675,528TOTAL
      CURRENT LIABILITIES
                
                
                257,317
                
                
                
                5,830,341Due
      to related parties- non-current portion
                
                
                6,822,231
                
                
                
                22,485TOTAL
      LIABILITIES
                
                
                7,079,548
                
                
                
                5,852,826STOCKHOLDERS'
      DEFICIENCY:Preferred
      stock, $0.0001 par value, 10,000,000 shares authorized, 0 shares issued
      and outstanding
                
                
                -
                
                
                
                -Common
      stock, $0.0001 par value, 90,000,000 shares authorized, issued and
      outstanding 22,599,974 shares and 22,599,974 shares,
      respectively
                
                
                2,260
                
                
                
                2,260Additional
      paid-in capital
                
                
                598,154
                
                
                
                553,826Accumulated
      deficit
                
                
                (1,174,108
                )
                
                
                (925,466
                )Accumulated
      other comprehensive income (loss)
                
                
                28,176
                
                
                
                12,379TOTAL
      STOCKHOLDERS' DEFICIENCY
                
                
                (545,518
                )
                
                
                (357,001
                )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                
                $
                6,534,030
                
                
                $
                5,495,825





See
notes to consolidated financial statements.


2


UNIVERSAL
SOLAR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)(Unaudited)





Three Months Ended
                    
                    
                    Three Months EndedMarch 31, 2010
                    
                    
                    March 31, 2009SALES
                    
                    $
                    -
                    
                    
                    $
                    659,948COSTS
      AND EXPENSES:Cost
      of sales
                    
                    
                    -
                    
                    
                    
                    589,368Selling,
      general and administrative expenses
                    
                    
                    161,488
                    
                    
                    
                    83,469TOTAL
      COSTS AND EXPENSES
                    
                    
                    161,488
                    
                    
                    
                    672,837LOSS
      FROM OPERATIONS
                    
                    
                    (161,488
                    )
                    
                    
                    (12,889
                    )Interest
      expense
                    
                    
                    (85,309
                    )
                    
                    
                    (8,239
                    )Dividend
      and interest income
                    
                    
                    196
                    
                    
                    
                    -Gain
      (loss) on foreign currency transactions
                    
                    
                    (2,041
                    )
                    
                    
                    (254
                    )NET
      LOSS
                    
                    
                    (248,642
                    )
                    
                    
                    (21,382
                    )OTHER
      COMPREHENSIVE INCOME (LOSS):Foreign
      currency translation adjustment
                    
                    
                    15,797
                    
                    
                    
                    28,451COMPREHENSIVE
      LOSS
                    
                    $
                    (232,845
                    )
                    
                    $
                    7,069Loss
      per common share -basic and diluted
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.00
                    )Weighted
      average number of shares outstanding -basic and diluted
                    
                    
                    22,599,974
                    
                    
                    
                    22,574,974





See
notes to consolidated financial statements.


3


UNIVERSAL
SOLAR TECHNOLOGY INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)





Three Months Ended
                    
                    
                    Three Months EndedMarch 31, 2010
                    
                    
                    March 31, 2009OPERATING
      ACTIVITIES:Net
      loss
                    
                    $
                    (248,642
                    )
                    
                    $
                    (21,382
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Imputed
      interest on loans from related parties
                    
                    
                    44,328
                    
                    
                    
                    8,735Depreciation
      of property and equipment
                    
                    
                    3,325
                    
                    
                    
                    -Amortization
      of land use right
                    
                    
                    2,085
                    
                    
                    
                    3,524Changes
      in operating assets and liabilities:Accounts
      receivable
                    
                    
                    -
                    
                    
                    
                    (390,249
                    )Prepaid
      expenses and other current assets
                    
                    
                    (254,617
                    )
                    
                    
                    10,844Inventory
                    
                    
                    (25,213
                    )
                    
                    
                    -Accounts
      payable and accrued expenses
                    
                    
                    99,315
                    
                    
                    
                    (21,344
                    )NET
      CASH USED IN OPERATING ACTIVITIES
                    
                    
                    (379,419
                    )
                    
                    
                    (409,872
                    )INVESTING
      ACTIVITIES:Deposits
      for future deliveries of equipment
                    
                    
                    (221,061
                    )
                    
                    
                    (79,110
                    )Acquisition
      of property and equipment
                    
                    
                    (589,565
                    )
                    
                    
                    (4,178
                    )NET
      CASH USED IN INVESTING ACTIVITIES
                    
                    
                    (810,626
                    )
                    
                    
                    (83,288
                    )FINANCING
      ACTIVITIES:Loans
      from related parties
                    
                    
                    1,127,407
                    
                    
                    
                    374,252NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                    
                    
                    1,127,407
                    
                    
                    
                    374,252EFFECT
      OF EXCHANGE RATE CHANGES ON CASH
                    
                    
                    15,797
                    
                    
                    
                    29,028INCREASE
      IN CASH
                    
                    
                    (46,841
                    )
                    
                    
                    (89,880
                    )CASH
      - BEGINNING OF PERIOD
                    
                    
                    1,115,047
                    
                    
                    
                    259,025CASH
      - END OF PERIOD
                    
                    $
                    1,068,206
                    
                    
                    $
                    169,145Supplemental
      disclosures of cash flow information:Interest
      paid
                    
                    $
                    -
                    
                    
                    $
                    -Income
      taxes paid
                    
                    $
                    -
                    
                    
                    $
                    -





See
notes to consolidated financial statements.


4


NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS





1.
COMPANY OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES





1.1
Business Description





Universal
Solar Technology, Inc. (the “Company”) is a Nevada corporation in the
development stage. It is engaged in the manufacture and distribution of Silicon
ingots, wafers, solar cells, modules, and other PV application
products.





The
Company was incorporated under the laws of the State of Nevada on July 24, 2007.
It operates through its wholly-owned subsidiaries, including Kuong U Science
& Technology (Group) Ltd. (“KUST”), a company incorporated in Macau, Peoples
Republic of China (“PRC”) on May 10, 2007, and Nanyang Universal Solar
Technology Co., Ltd. (“NUST”), a company incorporated in Nanyang, PRC on
September 8, 2008.





On May
9th, 2008, the Company filed a registration statement on Form S-1 with the
Securities and Exchange Commission (SEC), and raised capital of $300,000 from a
self-underwritten offering of 2,000,000 shares of our common stock.





1.2
Unaudited Interim Financial Statements





The
unaudited financial statements, as of and for the three months ended March 31,
2010 and 2009, have been prepared in accordance with Generally Accepted
Accounting Principles in the United States for interim financial information and
with instructions to Form 10-Q.





In the
opinion of management, the unaudited financial statements have been prepared on
the same basis as the annual financial statements, and reflect all adjustments,
which include only normal recurring adjustments, necessary to present fairly the
financial position as of March 31, 2010 and the results of operations and cash
flows for the periods ended March 31, 2010 and 2009. The results for the three
months ended March 31, 2010 is not necessarily indicative of the results to be
expected for any subsequent quarter of the entire year ending December 31, 2010.


5


Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to the Securities and
Exchange Commission’s rules and regulations. These unaudited financial
statements should be read in conjunction with our audited financial statements
and notes thereto for the year ended December 31, 2009 as included in our report
on Form 10-K.





1.3
Currency Translation





The
reporting currency of the Company is U.S. dollars (USD). The functional currency
of KUST is Hong Kong dollars (HKD). The functional currency of NUST is Renminbi
(RMB). The subsidiaries’ functional currencies have been translated into USD for
reporting purpose.





Income
statement items were converted at the average exchange rates during the three
month period. Balance sheet items were converted at the period-end exchange
rates, except for equity accounts which were calculated at the historical rates.
Gains and losses from foreign currency transactions were recognized on an actual
basis.





RMB
related transactions must take place through PRC authorized institutions. No
representation is made that the RMB amounts could have been, or could be,
converted into USD at the rates applied in the translation.





1.4
Use of Estimates





The
preparation of financial statements requires management to make estimates and
assumptions. These estimates and assumptions could affect the application of
accounting policies, the disclosures of contingent assets and liabilities, and
reported amounts of revenues and expenses.





Accounting
estimates could change from period to period. Actual results could differ from
those estimates. Appropriate adjustments to estimates are made as management
becomes aware of changes in circumstances surrounding the
estimates.





1.5
Comprehensive Income (Loss)





Comprehensive
income (loss) is defined to include all changes in equity except those resulting
from investments by shareholders and distributions to shareholders. Among other
disclosures, all items that are required to be recognized under current
accounting standards as components of comprehensive income (loss) are required
to be reported in a financial statement that is presented with the same
prominence as other financial statements. Comprehensive income includes net
income (loss) and the foreign currency translation adjustment, net of
tax.





1.6
New Accounting Pronouncements





In August
2009, the FASB updated the accounting standards to provide additional guidance
on estimating the fair value of a liability in a hypothetical transaction where
the liability is transferred to a market participant. The standard is effective
for the first reporting period, including interim periods, beginning after
issuance. The adoption of this standard did not have a material effect on the
Company’s consolidated results of operations and financial
condition





In June
2009, FASB established Accounting Standards Codification TM (“ASC”) as the
single source of authoritative accounting principles recognized by the FASB in
the preparation of financial statements in conformity with the GAAP. The
Codification supersedes Codification supersedes all non-SEC accounting and
reporting standards. The Codification was effective for financial statements
issued for interim and annual periods ending after September 15, 2009. The
company adopted the new guidance for the quarter ended September 30, 2009.
Adoption of the Codification did not have any impact on the Company’s results of
operations or financial position.


6


In May
2009, FASB issued new guidance establishing general standards of accounting for
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued, or subsequent
events. An entity should apply the requirements to interim or annual financial
periods ending after June 15, 2009. Adoption of this standard did not have a
material impact on the Company’s results of operations or financial
position.





2.
GOING CONCERN





The
financial statements have been prepared in conformity with accounting principles
generally accepted in the United States, which contemplate continuation of the
Company as a going concern. The Company has incurred an operating loss since
inception and its cash resources are insufficient to meet its planned business
objectives. These and other factors raise substantial doubt about the Company's
ability to continue as a going concern.





3.
DUE TO RELATED PARTIES





March 31,
                      
                      
                      December 31,2010
                      
                      
                      2009Due
      to Company’s chairman and chief executive officer, non-interest bearing,
      no repayment terms (interest imputed at 5%) (See note 6)
                      
                      $
                      3,006,364
                      
                      
                      $
                      2,185,219Due
      to Zhuhai Yuemao Laser Facility Engineering Co., Ltd. (“Yuemao Laser”),
      non interest bearing, no repayment terms (interest imputed at 5%) (See
      note 6)
                      
                      
                      246,431
                      
                      
                      
                      238,009Loan
      payable to Yuemao Technology Ltd. (“Yuemao Technology”) (See notes
      6)
                      
                      
                      3,256,740
                      
                      
                      
                      3,252,300Due
      to Yuemao Technology, non interest bearing, no repayment terms (interest
      imputed at 5%)
                      
                      
                      293,400
                      
                      
                      
                      -Due
      to Company’s chairman and chief executive officer pursuant to loan
      agreement dated November 2, 2008, interest at 5%, due November 1, 2013
      (interest due or principal)
                      
                      
                      22,485
                      
                      
                      
                      22,485Total
                      
                      
                      6,825,420
                      
                      
                      
                      5,698,013Current
      portion
                      
                      
                      (3,189
                      )
                      
                      
                      (5,675,528
                      )Non-current
      portion
                      
                      $
                      6,822,231
                      
                      
                      $
                      22,485





Both
Yuemao Laser and Yuemao Technology are PRC companies and controlled by our
Company’s Chairman, Wensheng Chen.


7


4.
MAJOR CUSTOMER





The
Company has two major customers in India, Kotak Urja Private Limited, and Suman
Lakshmi Enterprises. The sales to Kotak Urja Private Limited accounted for
approximately 97% of total revenue in 2009. Under the terms of the purchase
agreements, the Company is obligated to replace nonworking modules for a period
of one year from the date of deliveries. Up to the expiration date of the
warranty, there is no request for replacement.





5.
INCOME TAXES





The
Company has not recorded a provision for United States federal income tax for
the periods presented due to its consecutive net loss since the inception of
business.





The
Company’s Chinese subsidiaries are governed by the Income Tax Law of the
People’s Republic of China concerning private enterprises, which are generally
subject to tax at a statutory rate of 25% on taxable income.





As of
March 31, 2010, the Company had approximately $128,000 and $585,000 of net
operating loss carry forwards for income tax purposes in the United States and
China, respectively.





The
Company has provided a 100% allowance against the deferred tax asset in the
financial statements at March 31, 2010 and the management will continue to
review this valuation allowance and make adjustments as
appropriate.





6.
SUBSEQUENT EVENTS





On April
16, 2010, the Board of Directors accepted the resignation of Ms. Ling Chen as
the Company’s CFO and at the same time appointed Ms. Lijie Zhu as the Company’s
CFO to replace Ms. Chen.
 
 On May 5,
2010, NUST amended the previous oral loan agreement with Yuemao Technology (see
Note 3), and formed a Line of Credit Agreement. By March 31, 2010, NUST has
received the total cash amount of RMB 24,200,000. NUST may continue to borrow
from Yuemao Technology with a nominal interest as 1percent per annum. NUST
promises to pay the principal and the interest balance by
12/1/2013.
 
 On May 5,
2010, KUST amended the previous oral loan agreement with Yuemao Laser
Corporation, and formed a Line of Credit Agreement. By March 31, 2010, KUST has
received the total cash amount of HKD 1,891,373. KUST may continue to borrow
from Yuemao Laser with a nominal interest as 1percent per annum. KUST promises
to pay the principal and the interest balance by 12/1/2013.
 
 On May 5,
2010, KUST amended the previous oral loan agreement with the CEO Wensheng Chen,
and formed a Line of Credit Agreement. By March 31, 2010, KUST has received the
total cash amount of HKD 23,338,485.13 and USD 22,485.  KUST may
continue to borrow from Wensheng Chen with a nominal interest as 1percent per
annum. KUST promises to pay the principal and the interest balance by
12/1/2013


8


Item
2.  Management’s Discussion and Analysis of Financial Condition and Results
of Operations.




The
following discussion should be read in conjunction with the Financial Statements
and Notes thereto appearing elsewhere in this Form 10-Q.





DISCLAIMER
REGARDING FORWARD-LOOKING STATEMENTS





This
document contains certain forward-looking statements, which are made under the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Terms such as “anticipate”, “may”, “will”, “should”, “believe”, “estimate”,
“expect”, “intend”, “plan”, predict”, “project”, “target”, “will likely result”,
“will continue” and similar expressions are intended to identify forward-looking
statement and based upon our expectations at the time they made. The
forward-looking statements are not guarantee for future performance and actual
results may differ from those indicated or implied in the forward-looking
statements due to a various factors including, but not limited to changes to our
assumptions, risks and uncertainties involved, many of which are beyond our
control. We discuss risks and uncertainties in great details under item IA “Risk
Factors” below.





The
company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. However, your attention is directed to any further
disclosures made on related subjects in our subsequent annual and periodic
reports filed with the Securities and Exchange Commission on Forms 10-K, 10-Q
and 8-K.





The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and
accompanying notes and the other financial information appearing in Part I, Item
1 and elsewhere in this report. The Company’s fiscal year end is December
31.




RESULTS
OF OPERATIONS





The
company’s focus during 2010 has been on completing the development of its
Nanyang factory. With the newly finished manufacture, the annual production
capacity can reach to 38MW silicon ingots, 7MW solar wafers, and 30 MW solar PV
modules by the end of third quarter of 2010.





Revenue
Recognition





Affected
by the significant price decrease for solar products, it was not cost effective
for the Company to sell products manufactured by a related party as it has done
in the past. As a result, there were no revenues recognized during the first
quarter of 2010 compared to $659,948 for the three months ended March 31, 2009,
generated from our major two customers of solar PV modules manufactured by a
related party. Instead, the Company has focused its efforts on completing the
construction of its manufacturing facilities in order to become more vertically
integrated. As a vertically integrated company, we will be able to increase the
profit margin of our products and sell our products at lower
prices.





Cost
of Sales





The cost
of sales for the three months ended March 31, 2010 was zero, as we had no
sales, comparing to $589,368 for the three months ended March 31, 2009. The
cost of sales in the amount of $589,368, mainly including raw material, was
contributed to the revenue generated by KUST last year.





Gross
Profit





Gross
profit is affected by numerous factors, including our average selling prices,
foreign exchange rates, our manufacturing costs and the effective utilization of
our production facilities. Our gross profit for the three months ended March 31,
2010 was zero, compared to $70,580 for the three months of 2009 because we had
no sales for reasons discussed above.


9


Selling,
General and Administrative





Selling,
general and administrative expense consists primarily of salaries and other
personnel-related costs, professional fees, advertisement, and other selling
expenses. It was $161,488 for the three months ended March 31, 2010, compared to
$83,469 for the three months ended March 31, 2009. The increase was mainly
associated with the expenses related to consulting, legal and audit fees in
relation to our registration of our common stock with the SEC. We expect these
expenses to increase further in the near future, both in absolute dollars and as
a percentage of net sales, in order to support the completion of manufacturing
construction, installation of equipment, improvement of our information
processes and systems, compliance and other infrastructure required for a public
company.





Interest
Expense





Interest
expense was $85,309 for the three months ended March 31, 2010, compared to
$8,239 for the three months ended March 31, 2009. The majority of the $85,309
interest expense was attributable to the imputed interest expense on the loans
from related parties.





Net
Loss





Net loss
for the first quarter was $248,642 compared to $21,382 for the first quarter of
2009 as a combination result of the absence of revenue, and increased
administration and personal expenses. The number of employees has increase from
4 to 54 at the end of the first quarter of 2010.





Foreign
Currency Gain (Loss)





Foreign
currency gain (loss) consists of gains and losses resulting from holding assets
and liabilities and conducting transactions denominated in currencies other than
our functional currencies. During the three months ended March 31, 2010, we
recognized a foreign currency translation gain of $15,797, compared to $28,451
for the three months ended March 31, 2009.





LIQUIDITY
AND CAPITAL RESOURCES





Our
operation is primarily funded through paid-in capital and short term and long
term loans from the related parties. As of March 31, 2010, we had $1,068,206 in
cash, cash equivalents and marketable securities, compared with $169,145 ended
March 31, 2009. We do not have any off balance sheet arrangements that are
reasonably likely to have a current or future effect on our financial condition,
operating results and cash flows.





Operating
Activities





For the
three months ended March 31, 2010, cash used in operating activities was
$379,419 compared with $409,872 used during the three months ended March 31,
2009. This was primarily attributable to cash used in prepaid expenses, other
current assets and inventory. Offset to the increase was an increase in imputed
interest on loans from related parties of $44,328 and net increase in accounts
payable and accrued expenses of $99,315.





Investment
Activities





For the
three months ended March 31, 2010, cash used in investment activities was
$810,626 compared to $83,288 for the three months ended March 31, 2009. The
increase is primarily related to cash paid as deposits for future deliveries of
equipment and acquisition of property and equipment as a result of a series
equipment purchases for supporting business establishment and future
growth.





Financial
Activities





Financial
activities provided net cash inflow of $1,127,407 during first three months of
2010 as compared to $374,252 for the same period 2009. As of March 31, 2010, the
total proceeds from related parties amounted to $6,825,420 or net of $1,127,407
during the period.


10


Off-Balance
Sheet Arrangements





As of
March 31, 2010, we have not entered any financial guarantees or other
commitments to guarantee the payment obligations of any other parties. We do not
have any off balance sheet arrangements that are reasonably likely to have a
current or future effect on our financial condition, operating results and cash
flows.





The
recent and unprecedented disruption in the credit markets has had a significant
impact on a number of financial activities. Additional financing is desirable
within the next 9 months in order to meet our current and projected cash flow
deficits from business operations and future development.





As of
March 31, 2010, our liquidity and capital resources have not been materially
adversely impacted and we believe that they will not be materially adversely
impacted in the near future.


11


Item
3.  Quantitative and Qualitative Disclosures about Market Risk





The
Company is exposed to market risks, such as foreign currency risk and commodity
price risk.




Item 4T. Evaluation of Disclosure Controls and
Procedures





EVALUATION OF DISCLOSURE CONTROLS AND
PROCEDURES





Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended, as of the end of the period covered by this
Quarterly Report on Form 10-Q (the “Evaluation Date”). The purpose of this
evaluation is to determine if, as of the Evaluation Date, our disclosure
controls and procedures were operating effectively such that the information,
required to be disclosed in our Securities and Exchange Commission (“SEC”)
reports (i) was recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms, and (ii) was accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.




Based on
this evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that, as of the Evaluation Date, our disclosure controls and
procedures were operating effectively.




CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING





The
Company’s management, with the participation of the Chief Executive Officer and
Chief Financial Officer, has evaluated the Company’s internal control over
financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange
Act of 1934, as amended, during the fiscal quarter covered by this report, and
they have concluded that there was no change to the Company’s internal control
over financial reporting that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial
reporting.





CEO
AND CFO CERTIFICATIONS





We have
attached as exhibits to this Quarterly Report on Form 10-Q the certification of
our Chief Executive Officer and Chief Financial Officer which are required in
accordance with the Exchange Act. We recommend that this Item 4 be read in
conjunction with those certifications for a more complete understanding of the
subject matter presented.





LIMITATION
ON THE EFFECTIVENESS OF CONTROLS





The
inherent limitations of the control systems, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance that the control
system’s objectives are being met. These inherent limitations include the
realities that judgments in decision-making can be faulty and that breakdowns
can occur because of simple error or mistake. Control systems can also be
circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the controls. The design of any system of
controls is based in part on certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions. Over time, controls may
become inadequate because of changes in conditions or deterioration in the
degree of compliance with policies or procedures.


12


PART
II - OTHER INFORMATION


Item
1.    Legal Proceedings




As of
this quarter reported ended March 31, 2010, there is no pending litigation made
against Universal Solar Technology, Inc. In the ordinary conduct of our
business, we are subject to periodic lawsuits, investigations and claims,
including, but not limited to, routine employment matters.





Item
1A.    Risk Factors





There
have been no material changes from risk factors as previously disclosed in our
annual report on Form 10-K filed on March 31, 2010.





Item
2. Unregistered Sales of Equity Securities and Use of Proceeds





For a
description of the unregistered sales of equity securities and use of proceeds,
refer to our Annual Report on Form 10-K for the year ended December 31, 2009
filed with Securities and Exchange Commission. No advertising and general
solicitation was employed in offering the securities. The offerings and sales
were made to a limited number of persons, all of whom were accredited investors
and executive officers of our company. All of our shareholders are provide with
access to our Securities and Exchange Commission filings.





Item
3.    Defaults upon Senior Securities




None.




Item
4.   Other Information




None.




Item
5.   Exhibits




Exhibit No.
                
                Title of Document31.1
                
                Certification
      of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended31.2
                
                Certification
      of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended32.1
                
                Certification
      pursuant to Section 906 of Sarbanes Oxley Act of 2002 (Chief Executive
      Officer)32.2
                
                Certification
      pursuant to Section 906 of Sarbanes Oxley Act of 2002 (Chief Financial
      Officer)


13


SIGNATURES




In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, there unto duly
authorized.




Universal
      Solar Technology, Inc.Date:
      May 17, 2010
              By:
              /s/ Wensheng ChenWensheng
      ChenChief
      Executive OfficerBy:
              /s/ Lijie ZhuLijie
      Zhu
                Chief
      Financial Officer
                (Principal
      Financial and Accounting
Officer)


14